26 Feb 2015 | 02:30 pm | 2 min. read
- High Court gives permission to review ‘Accelerated Payment Notices’ - Court asks HMRC to stop issuing notices International law firm Pinsent Masons has won the right to bring a Judicial Review of HMRC’s use of ‘Accelerated Payment Notices’ against members of Ingenious Media film partnerships.
Accelerated Payment Notices were first introduced last year and enable HMRC to demand upfront payment of any disputed tax 1, prior to any decision by a tax tribunal. Notices demand full payment within 90 calendar days and there is no right of appeal. Some commentators have described APNs as a “shoot first, ask questions later” approach to tax issues.
Ingenious Media has previously denied HMRC allegations that it is involved in a series of schemes that were not legitimate businesses but a means of avoiding tax. Several high-profile individuals, including prominent film and sports stars, are reported to have become involved in such schemes in good faith - and subsequently been subject to notices demanding that millions of pounds be paid to HMRC before any court is able to decide if tax relief obtained was legitimate.
The court has also asked HMRC to agree terms with Pinsent Masons for a moratorium on issuing or enforcing Accelerated Payment Notices in relation to additional investors who sought to be added to the Pinsent Masons action.
HMRC opposed the application for permission to bring a Judicial Review. In this case the court has said that this is “clearly a case where permission should be granted”. It is very rare for the courts to give permission for a judicial review. Research by Thomson Reuters legal shows that less one 1 in 10 applications for permission are successful.
Jason Collins, Head of Tax at Pinsent Masons, comments: “The court has signalled that it has genuine concerns over whether these payment notices are actually lawful. Members of these film partnerships have been issued with bills worth hundreds of millions of pounds prior to any full review of their case, and have been denied the right to appeal.”
"In many cases, HMRC appears also to have failed to follow its own procedures to enquire into and investigate the members individual relief claims. The legislation allows them to collect money up front in an enquiry so the absence of an enquiry has to be fatal".
Furthermore, the legislation gives HMRC discretion, not a duty, to issue notices. These notices have been issued whilst the Ingenious tax appeal is actually being heard, alongside a stark demand from HMRC to settle on terms unfavourable to the taxpayer.
Collins says "HMRC said it needed this new legislation to force taxpayers to litigate or walk away. Yet, here, HMRC has sought to delay the tax appeal on more than one occasion”
Pinsent Masons says that it intends to add additional investors to its group action and that the ruling could have implications for the broader use of APNs. HMRC has identified more than 40,000 cases where a notice may be issued.
Explains Jason Collins: “A large number of taxpayers - not just Ingenious partners - will want to dispute the notices and join the action.”
Pinsent Masons explains that Accelerated Payment Notices are particularly problematic given that HMRC’s high profile clamp-down on suspected tax avoidance has pushed the backlog of tax disputes waiting to be heard close to all-time highs at 28,056 2.
Jason Collins comments: “A long wait for a tribunal case to be heard is not as much of an issue for HMRC as it is for a taxpayer that has already had to pay the tax that is in dispute. HMRC is already under-resourced and the propensity for increased procedural delay on HMRC's part will only increase.”
“Although HMRC would have to pay interest if it lost the case at 0.5%, the taxpayer has to pay 3% if the shoe is on the other foot. HMRC is heavily stacking the system in its favour.”
1 Where HMRC believes a tax avoidance scheme has been used
2 Figures published for Q2 (July-September) 2014
Pinsent Masons' David Isaac has once again been ranked in the OUTstanding LGBT+ Role Models 2020 list.
Multinational law firm Pinsent Masons has advised the Department for Digital, Culture, Media and Sport (DCMS) on its innovative joint £28m investment in 5G test projects to showcase the capability of 5G technology across a range of industries and identify commercially sustainable long-term use cases.
Multinational law firm Pinsent Masons advised GNA Biosolutions GmbH on IP and commercial aspects of its rapid PCR Covid-19 test.
The multinational law firm Pinsent Masons advises the holding company of the founder Dr Hardy Walle on the sale of all shares of Bodymed AG to Nestlé Health Science.
Multinational law firm Pinsent Masons has advised the shareholders of Goodtill on its sale to SumUp
Handeslblatt and Best Lawyers recognised 23 partners of multi-national law firm Pinsent Masons as Best Lawyers in Germany 2020.
For all media enquiries, including arranging an interview with one of our spokespeople, please contact the press office on